Which of the Following Statements Is Correct

question 62

Multiple Choice

Which of the following statements is correct?

• A)If a new partner invests cash in an existing partnership and a bonus is given to a new partner, the old partners' capital accounts increase.
• B)When a new partner is admitted to an existing partnership upon an investment of cash, the new partner's capital account may appropriately be debited for an amount other than the amount of cash invested.
• C)The partnership agreement should include steps to follow if a partner withdraws from the partnership.
• D)When a new partner is admitted to an existing partnership upon an investment of cash, the new partner's capital account will always equal the amount of cash the new partner invested.

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Definitions:

Terminal Value

An estimate of a business's value beyond the explicit forecast period and into perpetuity, often used in financial modeling to estimate the company's long-term sustainability.

Non-Normal Cash Flows

Cash inflows and outflows that do not follow a regular, predictable pattern over time.

MIRR

Modified Internal Rate of Return; a financial measure used to evaluate the attractiveness of investments, adjusting for the costs of investment and for different rates of reinvestment of cash flows.

Required Rate of Return

The minimum return an investor expects to receive from an investment, considering the risk associated with it.